Definition

• A note of sale is a formal document given to a seller during the completion of a good faith sale. The note of sale shows that a buyer purchased or soon will pay for certain goods or services, thereby showing the seller that there is a clear intent of the seller to assume ownership and that the goods or services should no longer be considered for sale. Typically, a middleman, such as a broker, provides this document to the seller, but in some instances, the buyer may provide the sale note directly to the seller.
  
  

When to Provide the Note

• A buyer or middleman often provides a note of sale to the seller upon receipt of payment for the goods or services. However, depending on the terms of the sale agreement, a seller also may provide the note of sale prior to making a partial or complete payment. Either way, the seller usually receives the note of sale before he releases the goods or provides the service.
  
  

Contents

• A note of sale details the parties involved in the sale agreement, as well as their contact information. It describes the goods or services involved. The note also reiterates the terms of the sale agreement, including those relating to payment amounts and methods. The note also may stipulate what conditions or laws to which the sale agreement is subject. Lastly, the note contains the signature of the buyer and the date on which he signed the note. Often, notes of sale contain a paragraph about what happens if the buyer fails to provide payment as stipulated in the original sale agreement, so a note of sale does not always mean that ownership of the goods or services will transfer, nor does it protect the buyer from legal action taken for nonpayment.
  
  

Ownership

• Importantly, a note of sale does not always change ownership legally. For example, you may accept a note of sale from a buyer if you are selling a car, but the car legally is not the buyer's until you transfer the title, even if you've already received payment. Because of this, as a seller, take care to follow the proper ownership transfer regulations that apply to whatever it is you are selling. Following the transfer of ownership, draw up another document that verifies you have taken the steps necessary to transfer ownership, that the terms of the original sale agreement are satisfied and that you, as the seller, acknowledge you have relinquished your right to the property or service. Sign and date this document with the buyer and make copies of any other documentation that supports the ownership transfer.